TTIP trade deal and it's impact on democracy

Trade agreement being negotiated behind the scenes

In my last post I had a critical look at the trans-pacific partnership (TTP). And so to be fair and also bring this issue closer to home I will in this post have a look at the Transatlantic Trade and Investment Partnership (TTIP). TTIP is very similar to TTP, a proposed regional free-trade agreement, but between the European Union and the United States. Proponents of TTIP argue that it would result in multilateral economic growth, while critics argue that it would increase corporate power and make markets more difficult to regulate for public benefit. Like TPP this trade agreement has been delayed by leaked draft documents, due to it's secretive nature, but could be finalized by the end of 2014.

Corporate Control

Similar to the case of TTP a very controversial clause in the TTIP is the Investor-state dispute settlements (ISDS). The ISDS would allow corporations to sue governments, for any government action (at any level, including local government level) that limits a corporation's future profits. One example of how the ISDS clause in TTIP would impact countries can be found in the case of the Swedish, part state owned, energy company Vattenfall suing the German government over the issue of terminating nuclear power plants. Vattenfall demands payouts of 4,7 billion euros (Der Spiegel), and has caused outrage in Germany. Other examples includes tobacco companies suing the Australian government over health labeling of cigarettes, and fracking companies suing the Canadian government over environmental protection. The original justification for introducing ISDS in trade agreements was for trade deals with countries where the judicial system was weak in protecting foreign investors. But this is not the case with either the EU or the US. According to the latest UN report on the topic, ISDS cases has increased from 0 in 1992 to 514 in 2012.

Responses by civil society

There is now a growing civil society resistance to TTIP and ISDS inclusion in the TTIP negotiations. Last month there were 450 protest actions across 24 member states (The Greens Europe). The European NGO Finance Watch writes about ISDS that "the very principle of such a mechanism is anti-democratic, because it allows investors to challenge legitimate regulations and other rules that have been created and voted by democratic institutions with a view to protecting their citizens". Corporate Europe Observatory (CEO) has reported that of 560 lobby encounters that the European Commission trade department held to prepare the negotiations, 520 (92%) were with business lobbyists, while only 26 (4%) were with public interest groups (CEO). That must be considered corporate capture. A large number of European scientists have also voiced concern over ISDS legal nature, quote "there is little evidence linking the conclusion of the Treaties to increased flows of foreign direct investment, and there is little evidence that they contribute to other development goals, such as encouraging good governance" (University of Kent). And a recent study from Tufts University has concluded through modelling that TTIP could lead to: net loss in exports for the EU, a net loss in GDP, and a loss in employment of some 600 000 jobs, and the author conclude by stating that "In the current context of austerity, high unemployment and low growth, increasing the pressure on labor incomes would further harm economic activity" (Capaldo, 2014).

Impact on environment, health and food standards

Many environmental organisations fear that the TTIP will ignite a "race to the bottom" regarding environmental regulations in the EU, so that they come to resemble the US far weaker regulatory system. Most likely the TTIP will accelerate the privatization of public goods and services such as National Health systems. This could have tremendous effects on public health. And many analysts agree that TTIP would allow big food corporations to avoid food safety regulations and undermine sustainable agricultural practices in the rush for profits and trade. For example, the US has much weaker standards on animal welfare, ecosystem protection and GMO labeling. These are serious citizen concerns that has not been sufficiently addressed by governments wishing to take part of the TTIP.

Conclusion

Trade unions, consumer groups, environmentalists and digital rights activists are opposed to increasing corporate rights over sovereign nations. Almost all (centre-)left groups in the European Parliament have voted against ISDS. So have the French Assemble and the Dutch Parliament. In Sweden, however, both the moderates (M) and social democrats (S) are positive to the TTIP (ETC, 2013). The current prime minister, Stefan Löfven, has stated that he welcomes the TTIP but that "social justice issues should be included" (ibid). This is a paradox since the (S) representative Mikael Damberg in a leaked document to Cecilia Malmström, the EU commissioner for trade, has signed a letter pushing for ISDS inclusion in TTIP (TTippen.se). The most troubling issue is perhaps how much of the negotiations have been kept secret from public and governmental scrutiny, similar to the TPP. Moreover it seems that countries have become so desperate for economic growth that they are willing to throw everything they worked for, in terms of environmental and health regulation, out the window. I am also surprised that conservatives don't seem to react to this issue as much as the left, one might think that they should be even more concerned with national sovereignty.